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Much to the relief of the Chinese authorities and beleaguered stock market participants, most of the economic data released this year have exceeded market expectations. Notably, fixed investment rose 4.2% y/y, retail sales grew 5.5% y/y, and industrial profits climbed 10.2% y/y in the combined January-February period (Table 1). Nevertheless, we are of the view that the economy still has a tough road ahead, which was highlighted by exports’ 7.5% y/y drop in March. Even Beijing openly acknowledged in its heavily scrutinized Government Work Report (GWR) that achieving the 2024 economic targets, namely real GDP growth of around 5%, “will not be easy.”
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